Rumor Mill: Facebook plans branded smartphone for mid-2013 launch

In a familiar turn of the rumor mill, Bloomberg is reporting that Facebook is working with HTC to release a Facebook-branded smartphone as soon as mid-2013.

The report, citing unnamed sources familiar with the matter, follows similar recent reports that Facebook wants to get more directly into the mobile market. According to the report, the companies had hoped to release the phone by the end of the year but its launch was pushed back so HTC could work other products. Additionally, the report noted that Facebook has assembled a team of former Apple (NASDAQ:AAPL) engineers to work on a modified operating system for the device.

HTC declined to comment, according to Bloomberg, and Facebook released the same statement it produced when AllThingsD reported in November 2011 that HTC and Facebook were working together on a smartphone. "Our mobile strategy is simple: We think every mobile device is better if it is deeply social," Facebook said in a statement. "We're working across the entire mobile industry; with operators, hardware manufacturers, OS providers, and application developers to bring powerful social experiences to more people around the world."

A New York Times report from May also indicated that Facebook had hired former Apple software and hardware engineers for its mobile phone effort. The Bloomberg report said the team from Apple has been primarily focused on retooling Facebook's iPhone application, with an initial release that could be announced within a couple of months. Facebook has also hired former key Palm webOS engineers, Bloomberg reported.

In November AllThingsD reported the Facebook smartphone, code-named "Buffy" in honor of the television series Buffy the Vampire Slayer, was said to run a heavily modified version of Google's (NASDAQ:GOOG) Android platform, and was said to support HTML5. HTC reportedly beat out Samsung Electronics to land the Facebook phone deal. Although HTC and rival manufacturers have developed devices with dedicated Facebook buttons, the Buffy phone would reportedly integrate social media services at a far deeper level, integrating contacts and sharing into the core of the user experience.

Ahead of its initial public offering in May, Facebook detailed its shortcomings in monetizing its presence in mobile. In securities filings at the time, Facebook explained that increasing its mobile base, and specifically the shift of users from the ad-supported Web version to its apps, could potentially hurt its business model and long-term revenue goals.

Facebook boasts more than 901 million users worldwide, up 33 percent from 680 million a year ago, with 488 million users accessing the site via a mobile device each month. However, Facebook co-founder and CEO Mark Zuckerberg said in May that improving the social networking giant's mobile application is his "first priority" for 2012.

"Usage is shifting to mobile, and they have not been able to monetize mobile," Victor Anthony, an analyst at Topeka Capital Markets, told Bloomberg. "To the extent that it's a device you own and carry around with you at all times, and it ties into the Facebook experience, it will be beneficial. They could then put a lot of ads onto the platform."